Inside Jordan’s Fight to Tackle COVID-19

IMF News, July 20, 2020

Source details

IMF expects Jordan’s economy to contract in 2020—for the first time in decades.
Jordan had managed to grow at an average rate of 2 percent despite enduring regional and international shocks to the economy amounting to 44 percent of GDP over the past decade.
Tourism represented 10 percent of GDP pre-pandemic.
Over 250,000 daily wage workers affected by the lockdown.
The global slowdown is expected to impede foreign direct investment, remittances, trade, and tourism.
Government raised confidence through a double-tranche Eurobond issuance with interest rates of 4.95 percent over 5-year maturity and 5.85 percent over 10-year maturity.
Jordan is producing and exporting masks and has a vibrant tech start-up sector that can facilitate business activity amid limited cross-border traveling.

Early and strict lockdown implemented after only a few infections; prioritization of human safety.
Investments in affordable and widespread testing.
Delivery of food and necessary items to households.
Lowered sales tax on key protective equipment.
Established a fund to cover emergency medical outlays for the Ministry of Health.
Temporary cash-flow relief to companies through:
- delayed payments of sales taxes and customs duties,
- delayed utility payments,
- temporarily reduced social security contributions.
Support for vulnerable daily wage workers via the National Aid Fund cash transfer program.
Social Security Investment Fund enacted policies including in-kind transfers and benefits for the unemployed and self-employed.
Central Bank of Jordan actions:
- reduced policy rates,
- injected liquidity by reducing reserve requirements on time deposits,
- eased terms of financing programs for small- and medium-sized enterprises.
Government committed to compensate arrears owed to the private sector and is accelerating payments.

New four-year, $1.3 billion Extended Fund Facility (EFF) focuses on growth, jobs, and social safety nets.
EFF funds will be allocated toward financing the general budget including health, education, and social support.
Commitment to continue funding necessary capital expenditures (albeit to a lesser extent), maintain public sector wages, and strengthen social safety nets.
Continued support for Syrian refugees hosted in Jordan.
IMF lending helps lower debt service costs to free up additional fiscal space.
IMF approved $396 million in emergency assistance under the Rapid Financing Instrument (RFI) to fight COVID-19.
RFI funds are being spent from the national treasury account with specific budget lines to track and report crisis-related expenditures and linked to the Treasury Single Account.
Jordanian Audit Bureau will undertake ex-post audits of all crisis-mitigating inflows and spending and will publish the results.

Major concern about the youth of the Middle East and North Africa region facing foregone opportunities in jobs and education.
Need to channel tech literacy and innovation of youth to support remote working requirements.
Emphasis that social support must be disbursed as indiscriminately as a vaccine to prevent negative social impacts.
Concern that the international community may treat the Syrian refugee crisis as in the past despite it remaining a daily reality for Jordan.

Inside Jordan’s Fight to Tackle COVID-19, July 20, 2020 — International Monetary Fund